How Outsourcing & Automation Can Grow Your Real Estate Investing Business Like A Weed

How Outsourcing & Automation Can Grow Your Real Estate Investing Business Like A Weed

5 min read
Martin Orefice Read More

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Every Real Estate investment seminar I’ve attended and every business book I’ve read has talked about the importance of business systems. The ideas were groundbreaking, yet I couldn’t find anyone who had created and/or implemented systems in their investment business.

When I started investing, I wore every hat. I found myself taking on daily duties inclusive of:

  • Marketing for buyers
  • Marketing for sellers
  • Marketing for tenants
  • Prescreening buyers, sellers, and tenants
  • Running CMA’s
  • Making offers
  • Coordinating closings
  • Coordinating funding
  • Managing contractors
  • Bookkeeping
  • Managing tenants
  • Coordinating evictions
  • Doing repairs

The list is endless. I consider myself a very capable individual, and fortunately I was able to hold things together for a while. Eventually I reached the point where everything became too overwhelming. I spent every waking hour of the day tending to my business, yet I wasn’t growing. In reality, I didn’t want to. The thought of more phone calls, more management, more anything made me sick.

I knew there had to be a better way, so I dedicated myself to finding an answer. I had a difficult time finding a real estate investor that ran their business like a business. Most did a few projects a year, managed their own properties, and handled everything themselves. So I looked to other industries.

As an investor, I had severe disdain for real estate agents who always seemed to hamper great deals with their lack of knowledge or arrogant attitude. Then everything changed. I read the book Millionaire Real Estate Agent and realized that agents existed who sold hundreds of houses per year. I found my answer and set out to model their success.

Benefits of Automation

Why would you spend time, money, or resources on business automation? For me, the biggest benefits have been increased income, increased opportunity, and the ability to take back control of my life. When you are personally responsible for every function in your business, it’s just a matter of time before you reach burnout, get sick, destroy your relationships, and ultimately destroy your business.

At a certain point, you reach a ceiling of achievement based on time constraints. In real estate, over 80% of the business is administrative and doesn’t produce revenue. If you free yourself of administrative burdens, you can focus your efforts on income producing activities and drastically increase your revenue and profits.

Additionally, you’ll become more efficient so you can evaluate market trends, new business opportunities, and spend time with your family.

Every time I talk with investors about business automation and outsourcing I hear the same common objections. The say that they don’t want a big business, can’t afford to outsource, or enjoy swinging a hammer. But that’s almost never the case. There are many levels of automation and outsourcing, most of which don’t require large chunks of capital or put your business on a trajectory to take over the world.

Breaking Down Automation

Business automation comes down to three ideas: Elimination, Automation, and Delegation. You need to eliminate activities that aren’t necessary, automate what’s left, and then delegate what you automated.

The first step is to find out where you currently spend your time. I suggest either carrying around an open notebook, or using a software tool or application, like Evernote, to record everything you do over the period of a week. After you have your list, mark which items generate revenue. The majority of the other activities are things that can, and should, be outsourced.

When I first did this activity 4 years ago, I realized that I spent the majority of my time handling property management. I was managing a little over 20 properties and I had no systems or software in place to help the process. I ran the numbers and realized that by paying a property manager it would cost me roughly $1600 per month, but I would free up about 85% of my time. I knew I could create more than $1600 in revenue by spending that time searching for new deals, so I made the decision to hire a property manager. I do the same 80/20 analysis every year to ensure that I constantly improve, and I highly suggest you do the same. Here are some of the tasks I recently found myself doing that I realized I could automate or outsource:

  • Physically going to the bank to send wires
  • Performing property inspections before writing an offer
  • Turning Utilities On/Off
  • Reviewing and organizing scholarship applications

At the time of this article I’ve been able to automate or outsource all of these tasks. I now use an online wire system, trained a trusted team member to do inspections, had my assistant create and implement a utilities checklist, and outsourced the organization of the scholarship applications to my virtual assistant in the Philippines for $2.86 per hour.

Every investor is at a different place in their business life cycle, which means the lowest hanging fruit will be different for each person. Remember, if you can pay a Virtual Assistant in the Philippines $3 per hour to do bookkeeping, you only make $3 per hour when you do the task yourself.

Here are a few items based on your experience level that are easy wins:

Beginning Investor – You will want to do the majority of the real estate related items yourself at first so that you learn the business and effectively hire and manage outsourcers in the future. Spend your time focused on generating leads and making offers. I suggest outsourcing bookkeeping, property repairs, short sale negotiation, and some parts of marketing as a great first step.

Intermediate Investor – With some transactions under your belt you are ready to take your business to the next level. Some initial big wins are to outsource property management, working with buyers, many marketing tasks, and all aspects of closing coordination.

Advanced Investor – Along with the aforementioned items, I suggest outsourcing day-to-day management of renovation projects, all contract creation and execution, initial CMA’s, and sales. The last piece to outsource will always be offer making and acquisition, which can be done with the right resource.

As your business continues to evolve and you leverage third parties, you’ll notice that you’re able to get more deals done and make more money. I’ve heard the great guru Ron Legrand says, “The less I do, the more I make.” It sounds counter intuitive, yet it’s the truth. Trust me, I spent 5 years stubbornly fighting and doing EVERYTHING in my business, and was ready to walk away because I was burned out. Proper outsourcing saved both my business and my sanity.

The reason and result of elimination is to generate more time to focus on income generating activities (IGA’s), which are generating leads and making offers.

In future posts I’m going to walk through all aspects of business automation and outsourcing including specifics on each task, when and how to hire an assistant, common mistakes, business structure, and the numbers you need to track and review daily. If you have questions or any other suggestions for future posts, please leave them in the comments below.